A recent rule change shook up how real estate agents are paid, but it comes with an upside that could help buyers beat other offers on a home.

As of Aug. 17, homebuyers must negotiate how much they pay their real estate agent before starting their home search, a shift from the decades-long practice where both buyer’s and seller’s agents were paid from the sale proceeds, typically splitting 5% to 6% of the price.

With the rule change, buyer’s agents can be paid a number of ways, including as a percentage of the home price or a set fee. They could also still be paid out by the seller if it’s offered.

While this gives buyers more flexibility in negotiating how much they pay for an agent, it can be confusing, too — especially since it requires more back-and-forth between the buyer and agent, as well as between the buyer’s and seller’s agents.

But the change in policy also gives buyers an edge by allowing them to remove the seller’s obligation to pay the agent’s commission, potentially making their offer more competitive than other bids.

The rule change has created a new ‘bargaining chip’

Although sellers aren’t obligated to cover the buyer’s agent fees, as they previously were, many are still offering to, either out of simplicity or to make a listing more attractive, according to a recent Redfin report.

“In slow markets where there’s less demand, like Austin, agents report that most sellers are still willing to pay the buyer’s agent commission to attract buyers, and agent fees are mostly the same as before,” says Daryl Fairweather, Redfin’s chief economist.   

However, buyers who have already arranged to pay their agents could use that as a “bargaining chip” in their negotiations, especially in competitive markets, Fairweather says.

“In markets with low inventory and robust demand, like San Francisco and Boston, agents report more instances of negotiation around fees, with sellers asking buyers to make their best offer rather than preemptively deciding what they want to offer a buyer’s agent,” she says.

Covering the buyer’s agent commission will give buyers an “an edge” in markets “where sellers are calling the shots,” says Joe Muck, a realtor in Michigan. “It would probably have the same kind of impact as other concessions, such as offering post-sale occupancy or waiving an inspection.”

Offering to pay buyer’s agent fees is likely to favor more affluent buyers.  

“It’ll be harder for most first-time buyers who don’t have the proceeds from the sale of a previous home to afford this on top of the cash they already need for a down payment,” says Fairweather.

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